NCC tasks telecom operators on efficient usage of FOREX allocation

The Nigerian Communications Commission (NCC), has called on telecom operators to ensure efficient usage of FOREX allocation to prevent capital flight.

NCC made the call at a meeting with operators on “Framework for Confirmation of Reasonableness of Service Requests’’ in Abuja on Tuesday, while deliberating on ways to overcome the challenges of FOREX allocation in the sector.

Prof. Danbatta Umar, the Executive Vice Chairman of NCC said that as telecom services increased, it was imperative to expand coverage and optimise network capabilities through network elements which often engaged overseas vendors.

Danbatta was represented at the forum by Mr Bashir Idris, Head, Competition and Tarrifs Unit of the Policy Competition and Economic Analysis Department of NCC.

He said that these services were priced by the overseas vendors in foreign currencies and Nigerian telecom operators were required to pay for such services in foreign currencies thereby creating significant demand for foreign exchange.

“The CBN, in ensuring monetary and price stability and maintaining external reserves to safeguard the international value of the Nigerian currency, sought our assistance to address demand for foreign exchange by telecom industry.

“By virtue of this collaboration, the NCC provides expert advice and vets invoices and international payments to overseas vendors by telecom companies in Nigeria in order to ensure efficient usage of the FOREX allocation.

“This is for prevention of capital flight and round tripping amongst other things.

“This ultimately led to the development of appropriate rules and procedures for the processing of confirmation of reasonableness of service request/application submitted by CBN to the commission on behalf of Nigerian telecom,’’ he said.

Danbatta said that NCC in performing its role had observed instances of over-quoted invoices, double submissions, untenured contracts and demand notices not backed by required valid contract agreements.

He recalled that similar Confirmation of Reasonableness of Service (CRS) were held in 2003, 2009, and 2013 where subsisting procedures were developed and updated to guide the payments of invisible trade transactions.

Danbatta therefore called on all participants to contribute actively and constructively at the forum to help to enrich the CRS application process.

Mr Bashir Idris, the Head, Competition and Tariffs Unit of NCC, said the forum was to present a revised guideline for processing reasonableness of service requests.

“There are tangible and intangible assets being put together by operators, NCC is in charge of assessing the reasonableness of the pricing of the intangible assets like software.

“It is collaboration between the NCC and CBN to prevent the capital flight and all manner of infringement on our foreign exchange reserves.

“To make sure that whatever the operators are paying out to their vendors outside the country are actually what they should be paying out so that the country is not short changed.

“Over time since 2003 when we started this exercise, new challenge came up and we reviewed the guidelines to address those challenges so as not to put any of the parties in a difficult situation in their operations,’’ he said.

Idris said the forum was to help all stakeholders in the telecom industry on the way forward and tackle new challenges that had been noticed in the last couple of years.

He said this would ultimately benefit the telecom consumers because it would bring about realistic pricing based on realistic costing.